Fairscore Ltd trading as Updraft · DRN-6235456

The complaint Miss S complains that Fairscore Ltd trading as Updraft (Updraft) lent to her irresponsibly. What happened In April 2025, Miss S entered into a finance agreement with Updraft for a loan as shown below. Date Amount of credit Term Monthly payment Total repayable April 2025 £3,800 48 months £109.45 £5,230.73 In November 2025, Miss S complained to Updraft about the lending. In the complaint, Miss S said she didn’t think it had lent to her responsibly. She said had Updraft given proper consideration to her employment status and financial situation it would have realised that the lending was unaffordable. Miss S has said the loan caused her stress and has impacted her wellbeing. Updraft looked into Miss S’s complaint and issued a final response letter explaining it believed it had acted fairly when completing its checks. It said it had confirmed the agreement was affordable by gathering information from Miss S, checking the information the credit reference agencies held about her and using data from the Office for National Statistics (ONS). Updraft has said based on the information it found, it believes its decision to lend was fair. Miss S didn’t accept Updraft’s response, so she referred her complaint to our service. One of our investigators looked into it, and based on the evidence available, our investigator said she didn’t think Updraft’s decision to lend was fair. She explained that although Updrafts checks had been proportionate, they showed that after the loan repayments Miss S would be left with a sum too low to be considered a reasonable level of disposable income to cover any unexpected expenses and other living costs. Miss S accepted the investigators view but Updraft didn’t. It said that although the disposable income it calculated was low this wasn’t the expected outcome given the loan was for debt consolidation and it also pointed out the regulations don’t specify a lower floor for disposable income. Its comments didn’t change the investigators view and as no agreement could be reached, the complaint has been passed to me to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I think there are key questions I need to consider in order to decide what is fair and reasonable in this case:

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• Did Updraft carry out reasonable and proportionate checks to satisfy itself that Miss S was able to sustainably repay the credit? • If not, what would reasonable and proportionate checks have shown at the time? • Did Updraft make a fair lending decision? • Did Updraft act unfairly or unreasonably towards Miss S in some other way? Updraft had to carry out reasonable and proportionate checks to satisfy itself that Miss S would be able to repay the credit sustainably. It needed to assess the likelihood of Miss S being able to repay the credit, as well as considering the impact of the repayments on her. There is no set list of checks that it had to do, but it could take into account several different things such as the amount borrowed, the length of the agreement, the amount of the monthly repayments, and the customer’s circumstances. Updraft says it used Miss S’ credit file to understand her repayments to other debts and to get an understanding of her situation before it decided to lend. It’s said it found no recent defaults, missed payments, payment arrangements, bankruptcies, IVAs, or CCJ’s. Updraft says it asked Miss S about her income and verified this through open banking. It also said it calculated her housing costs using information from open banking. Updraft has said it calculated Miss S’ monthly credit commitments using data from the credit reference agencies and used ONS data to make a reasonable estimate of her other essential living costs. On balance I think the level of checks here are proportionate to the type and amount of lending Miss S had applied for. However, Updraft calculated that Miss S would be left with just over £161 a month in disposable income. Once repayments to this loan were factored in it would have left Miss S with around £52 a month to cover other non-essential costs and any unexpected expenses. I’m not persuaded this is a reasonable sum to allow Miss S to afford any unexpected costs and other reasonable living costs over four years and sustainably repay the credit being offered. Given this I’m not satisfied that Updrafts decision to lend was fair. Updraft has argued its calculations didn’t account for the loan being used for its intended purpose – debt consolidation. I’ve thought carefully about this, however I can’t see that Updraft asked Miss S about which debts she intended to consolidate. So, it’s not clear how it could be reasonably sure the loan would reduce Miss S’ overall payments to debt. It also didn’t make payments directly to other creditors, so there was no guarantee that the loan would be used for the declared purpose. Given this, I think it would have been reasonable to ensure, that even if the loan wasn’t used for debt consolidation, or didn’t reduce Miss S’ outgoings, that she would still have had enough disposable income to sustainably afford the loan. Based on what I’ve seen I don’t think Updrafts checks showed this. It also argued that it had been conservative in its calculations, and the disposable income shown wasn’t the expected outcome. However, Updraft has also said that when completing the affordability calculations, it used what it considered to be the most reasonable figures, and I agree that its checks were proportionate. So, I don’t think it can now fairly say that it would be unreasonable to rely on these figures or that the level of disposable income should be calculated differently. Updraft has acknowledged that £52 a month is a modest amount. However, it has also said that the regulations don’t set limits for what a reasonable disposable income would be. It’s right insofar as the regulations don’t give a particular figure for this. However, they do say that lenders should have regard to the outcome of the affordability checks in respect of the impact on the customer and consider the risk to the customer of not being able to meet

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repayments. Taking this into account, I think on balance having a disposable income of only £52 significantly increases the chances that Miss S would be unable to repay the loan sustainably over a four-year period. So, I think based on its calculations, Updraft should have been reasonably aware that Miss S would be unlikely to be able to sustainably repay the loan, without there being an adverse impact on her financial situation. Given this, I’m not satisfied Updraft made a fair decision to lend given what it knew about Miss S’ circumstances. Putting things right As I don’t think Updraft ought to have lent to Miss S, I don’t think it’s fair for it to be able to benefit from any interest or charges applied under the credit agreement. But I think Miss S did receive and use the funds so I think it’s fair that she should pay back the amount she borrowed. So, Updraft should: Add up the total repayments Miss S has made and deduct these from the total amount of money Miss S received. If this results in Miss S having paid more than she received, any overpayments should be refunded along with 8% simple interest (calculated from the date the overpayments were made until the date of settlement). *Updraft should also remove all adverse information regarding this account from Miss S’ credit file. OR If any capital balance remains outstanding, then Updraft should rework the account to remove any interest and charges applied, and then arrange an affordable and suitable payment plan with Miss S for the outstanding capital. Once Miss S has cleared the balance, any adverse information in relation to the account should be removed from her credit file. *HM Revenue & Customs requires Updraft to take off tax from this interest. Updraft must give Miss S a certificate showing how much tax it’s taken off if she asks for one. My final decision My final decision is that I uphold Miss S’ complaint and direct Fairscore Ltd trading as Updraft to put things right in the way I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss S to accept or reject my decision before 24 April 2026. Charlotte Roberts Ombudsman

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